Richardcyoung.com

The Online Home of Author and Investor, Dick Young

  • Home
  • How We Are Different
  • About Us
    • Foundation Principles
    • Contributors
  • Investing
    • You’ve Read The Last Issue of Intelligence Report, Now What?
  • Your Survival Guy
  • The Great Reset
  • COVID-19
  • My Rifles
  • Dividends and Compounding
  • Your Security
  • The Swiss Way
  • Dick Young
  • Debbie Young
  • Key West
  • Paris
  • Dick’s R&B Top 100
  • Liberty & Freedom Map
  • Bank Credit & Money
  • Your Survival Guy’s Super States
  • NNT & Cholesterol
  • Work to Make Money/Invest to Save Money
  • Your Health
  • Ron Paul
  • US Treasury Yield Curve: My Favorite Investor Tool

Not Much Hedge Fun(d)

August 21, 2012 By E.J. Smith - Your Survival Guy

Rhode Island, like most states, is on the hedge fund band wagon. General Treasurer Gina Raimondo invested $900 million of the public pensions with the hedgies. She argues that it will reduce risk and help meet investment returns of 7.5%. Good luck with that.

Raimondo was quoted as saying she’s more focused on the downside than the upside. I called her office to discuss this with her. I have yet to get a return call.

What’s jaw-dropping is that she assigned the work to 19 separate hedge funds. Is that what she means by reducing risk? How thoroughly could these 19 funds have been vetted? How many meetings did she have to attend to get the list down to 19?

Having spent time working on the institutional side of the business, I know that most of these meetings end with “let’s have a follow-up meeting.” And I reviewed the minutes from the meetings. The presentations are like fingernails on a chalkboard. I’d have the patience for maybe one of them. It’s like sending 19 boats alongside the Titanic.

Can you imagine the rat’s nest of trades and positions, dealing with 19 hedge funds? Come on, people. Talk about the right hand not knowing what the left hand is doing. If these guys can’t even manage a gaming company run by a retired Red Sox pitcher, how well are they going to do watching over 19 hedge funds?

And hedgies don’t work for free. They have their yachts to pay for, with taxpayers forking over the 2 and 20. Hedge funds’ annual take is 2% of the assets they manage and 20% of the profits, if there are any. And if you pay the fees and then they lose the profits, don’t expect to see your fee returned.

Hedge funds make my skin crawl. They don’t invest. They gamble. With pensions, it’s gambling with other people’s money. Treasurer Raimondo is a fiduciary. As such, she should reconsider the risks and fees. I don’t like hedge fund investing for anyone who can’t afford to lose money. There is a reason only accredited investors are allowed to invest in hedge funds on an individual basis: they can afford to lose money. Pensioners cannot. This is not an area for public pensioners who depend on this money for their survival.

State treasurers will explain that they’re reducing risk based on textbooks and price theory models. But sometimes models don’t work. Real-estate prices were not supposed to fall. They were not supposed to be closely correlated to the stock market. But it turns out that in panics, everything is correlated—to the exit signs. That’s something you don’t learn in a textbook. Rhode Islanders should be outraged.

Related Posts

  • Hedge Fund Fraudster
  • Hedge Fund Body Slam
  • Hedge Funds Limping Along
  • Author
  • Recent Posts
E.J. Smith - Your Survival Guy
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. His focus at all times is on preparing clients and readers for “Times Like These.” E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998.

E.J. has trained at Sig Sauer Academy in Epping, NH, NH, where he completed course-work in Practical and Defensive Handgun, Conceal Carry Pistol, Shotguns, Precision Scope Rifle and Kidnapping Prevention.

E.J. plays a Yamaha Recording Custom drum set with Zilldjian cymbals. His first drum set was a 5-piece Slingerland with Zildjians. He grew-up worshiping Neil Peart (RIP) of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris.

Please get in touch with E.J. at ejsmith@yoursurvivalguy.com

Click here to sign up for my free monthly Survive & Thrive letter.
Latest posts by E.J. Smith - Your Survival Guy (see all)
  • 4 Life Changing Words for Your Survival Guy: “You Should Try This” - January 26, 2023
  • Why Investors Should Forget Prices and Focus on Income - January 26, 2023
  • Welcome to Hotel California, Where You Can Never Leave - January 25, 2023

Dick Young’s Must Reads

  • TOP HEAVY: Focus on Big Indexing Could Cause Market Chaos
  • Your Survival Guy Prefers Bombardier’s Global Express 7500
  • The Masters of the Universe Align Themselves with CHINA Using YOUR Money?
  • Why Black Lives Matter Needs to Be Shut Down
  • Biden Wants to Gut the Tax Benefit of 401K Plans
  • Tucker Carlson Interviews My Favorite Florida Farmer
  • Victor Davis Hanson: How to Bust DC’s Stronghold
  • Your Life on Main Street will Never be the Same
  • The Fed – “Independent” and “Non Political” – Joins The Resistance
  • Hungarian Hardliner Viktor Orban Shows European Globalists the Way

Our Most Popular Posts

  • Pfizer CEO Terrified of Real Questions About His Vaccines
  • America's Super States and Stocks that Respect YOU
  • Give Me Clean, Efficient Gas
  • How the Biden Administration Is Destroying Our Energy Infrastructure
  • The Rich Seek More from Bank Accounts
  • Artificial Intelligence Is Coming, But It's Not Quite There
  • Is Kevin McCarthy’s GOP Willing to Do What It Takes on Debt?
  • The Sound of Silence
  • Strengthen Your Defenses Against Stroke
  • Forty Years Ago, Jogging a Mile a Day and Still Going

Disclosure

RSS Youngresearch.com

  • 4 Life Changing Words for Your Survival Guy: “You Should Try This”
  • Suddenly, Holding Cash Looks Good Again to Many
  • Anti-Carbon Crusaders in Davos Talk ESG and OPM
  • Is Passive Investing Already Passé?
  • Welcome to Hotel California, Where You Can Never Leave
  • What You’re Telling Me Matters
  • Can Banks Compete with Apple Pay and PayPal?
  • America’s Super States and Stocks that Respect YOU
  • Markets Are Calling the Fed’s Bluff
  • Don’t Let Your Lazy Cash Eat all Your Food

RSS Yoursurvivalguy.com

  • 4 Life Changing Words for Your Survival Guy: “You Should Try This”
  • Anti-Carbon Crusaders in Davos Talk ESG and OPM
  • Welcome to Hotel California, Where You Can Never Leave
  • What You’re Telling Me Matters
  • The Rich Seek More from Bank Accounts
  • California’s Wealth Tax Will Drive Out Remaining Rich Residents
  • Political Establishment Irate over Conservative Challenges to ESG
  • Congratulations Mikaela Shiffrin on 83rd Win
  • America’s Super States and Stocks that Respect YOU
  • NYC Bleeding Revenue as Wealthiest Flee the City

Will Western Tanks Be a Game Changer in Ukraine?

The Power of Words

4 Life Changing Words for Your Survival Guy: “You Should Try This”

Is Putin’s Meat Grinder Working?

California Unions Could Spike the Slowly Recovering Supply Chain

Ukraine Filled with Russian Sympathizers and Collaborators

Copyright © 2023 | Terms & Conditions | About Us | Dick Young | Archives